KUALA LUMPUR (April 19): Malaysia’s currency headed for a fourth straight weekly loss amid persistent stock outflows and concerns the nation’s debt may be excluded from the FTSE World Government Bond Index.

* USD/MYR up 0.4% this week to 4.1315, heading for its longest weekly run of gains since Oct.; that’s even as spot fell 0.3% on Friday

* Overseas investors sold $34m of Malaysian equities Wednesday, taking outflows this month to $239m

* MYR’s recent sell-off was overdone and weakness is likely to dissipate in the absence of further negative headlines, says Choong Yin Pheng, general manager for fixed income and economic research at Hong Leong Bank in Kuala Lumpur

** Ringgit will take its near-term cues from USD, global factors and BNM monetary policy

* 10-year govt bond yield up 2bps to 3.91% on Friday; has climbed 13bps this week, most since period ended May 25

* Decline in Malaysia’s ringgit and bonds is excessive, as there’s been no change in the nation’s economic fundamentals to warrant such a sell-off, ING economist Prakash Sakpal wrote in note

** Current-account surplus, MYR’s undervaluation and rising oil prices are a buffer

** BNM is more likely than not to ease policy at the May 7 review, and this supports MYR bonds

* Govt’s financial assistance totaling RM6.2b to state-owned palm oil company Felda will add to its debt burden, which is already above median of A-rated sovereigns, a credit negative: Moody’s